Financial Sector Faces Financial Crisis

Banks have a need to embrace regulation and compliance as a way to regain the public’s credibility and to earn back the trust of the large investors.

Ups and downs

The financial sector has had its ups and downs. Once it was declared, “Banks are too big to fail” in 2008, the “bank problem” was thought by some to be decided. However, in 2010 the Occupy protests gained sympathy when railed against saving such large financial organizations for what many saw as self-inflicted wounds. The public was somewhat mollified when most of the banks paid back the money from the bailouts. Nevertheless, still today people offer up their complaints, arguments and protests.. No matter what side of the aisle it comes from, a flurry of opinions fill the Internet, newspapers, and bulletin boards every day.

Now we have a different form of protest that is not being fought with picket signs, but perhaps the strongest tool of all — silence. Big investors have recently made feelings known (and voices heard) with their wallets and are putting their money into new ventures. Interestingly, shareholders selling their stakes in companies have tripled since 2008, creating new millionaires but that cash has not found its way into the financial services industry. The biggest fish are swimming somewhere else.

Combine diminishing investors with tighter regulation on banks and you have a financial services industry swimming against the current in many parts of the world. Where does it go from here?

Bad news or chance for improvement?

Before you run out to the bank and start stuffing your mattresses, keep reading. Everyone loves a comeback story and this would not be the first time the financial services industry needed one. Pre-bailout success is attainable and banks have set out plans to achieve it: To fight the silence from investors and the mountain of data and regulation, the financial industry is making bold moves.

Banks are already reaching out to the investors who have turned to property and other ventures, as well as branching out to Asian markets more than they have before. Most importantly, though, they’re responding to government-added regulatory interventions with integrated solutions that support compliance. No one doubts there is dire need to retain the integrity of financial institutions to bring the big investors back.

Just as their customers will take to any form of social media to express their opinions, banks will not be silenced. As history has shown, we’re not ready to let the big banks fail and they’re prepared to fight for their business.